Market regulator Security and Exchanges Board of India (SEBI) has barred Anil Ambani and 24 other entities from the capital market for five years, restraining the businessman from being associated with any listed company.
SEBI barred the industrialist and 24 other entities for diversion of funds from Reliance Home Finance Ltd (RHFL). The markets regulator imposed a penalty of Rs 25 crore on Anil Ambani and restrained him from being associated with the securities market, including as a director or key managerial personnel in any listed company, or any intermediary registered with the market regulator, for five years.
Further, the regulator barred Reliance Home Finance Ltd from the securities market for six months with a fine of Rs 6 lakh.
In a 222-page order, SEBI said that Anil Ambani, with the help of RHFL's key managerial personnel, orchestrated a fraudulent scheme to siphon off funds from RHFL by disguising them as loans to entities linked to him.
“The Board of Directors of RHFL issued strong directives to stop such lending practices and reviewed corporate loans regularly but the company's management ignored these orders. This suggests a significant failure of governance, driven by certain key managerial personnel under the influence of Anil Ambani,” SEBI stated.
The markets regulator further said that its findings have established the "existence of a fraudulent scheme, orchestrated by Noticee No. 2 (Anil Ambani) and administered by the KMPs of RHFL, to siphon off funds from the public listed company (RHFL) by structuring them as 'loans' to credit unworthy conduit borrowers, and in turn, to onward borrowers, all of whom have been found to be 'promoter linked entities', i.e., entities associated/ linked with Noticee 2 (Anil Ambani)".
The other 24 entities which have been barred include Amit Bapna, Ravindra Sudhalkar and Pinkesh R. Shah -- former key officials of RHFL. The regulator levied a fine of Rs 27 crore on Bapna, Rs 26 crore on Sudhalkar and Rs 21 crore on Shah.
The remaining entities -- Reliance Unicorn Enterprises, Reliance Exchange next Lt, Reliance Commercial Finance Ltd, Reliance Cleangen Ltd, Reliance Business Broadcast News Holdings Ltd and Reliance Big Entertainment Private Ltd -- were imposed a penalty of Rs 25 crore each. These fines were levied for “either receiving the illegally obtained loans or acting as intermediaries to facilitate the illegal diversion of funds from RHFL”.
In its order, the markets regulator noted the “cavalier approach of the company's management and promoter in approving loans worth hundreds of crores to companies that had little to no assets, cash flow, net worth, or revenue”.
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